NEW DELHI: Finance Minister Arun Jaitley on Thursday said the fallout of demonetisation was on predicted lines and the economy will benefit in medium and long term. A day after the Reserve Bank said that almost all of the demonetised currency came back into the system, Jaitley said the fact that money got deposited in banks does not mean that all of it is legitimate money.
“It’s nobody’s case that black money has been completely eliminated after demonetisation,” he said.
He said demonetisation, coupled with GST, will give a “significant boost” to direct tax revenues as many people have come under the tax net.
Although an overwhelming amount of money was deposited in banks it is not a concern for the government as it is good for the economy that more money has come into the formal system. “The fallout of demonetisation is on predicted lines … the fact that money got deposited in banks doesn’t make it legitimate money,” he said, adding the country was ready for demonetisation even though there was political resistance.
The RBI on Wednesday said about 99 per cent of Rs 15.44 lakh crore demonetised currency came back into the system. On the Goods and Services Tax (GST), Jaitley said its inflationary impact has been avoided and there is a scope of convergence of tax rates going forward.
The RBI has already recommended banks to initiate insolvency proceedings against 12 large defaulters.